Falling Liabilities Help U.S. Pension Plans in July

August 6, 2008 (PLANSPONSOR.com) - A greater decrease in liabilities than in assets helped the typical U.S. pension plan eke out a 0.6% improvement in July, according to BNY Mellon Asset Management.

Typical pension plan liabilities fell 1.4% versus a 0.8% decline for asset returns at a moderate risk portfolio, BNY Mellon said in a press release.  Year-to-date, funding ratios for typical pension plans have fallen 3%.

“While Treasury bonds were mixed during July, yields on high-grade corporate bonds increased and spreads were 19 basis points wider as investors continued their flight to quality,” said Peter Austin, executive director of BNY Mellon Pension Services, in the announcement. Higher bond yields result in lower liabilities for the typical pension plan.

The funding increase was a nice turnaround from the 4.8% decline in June (See Down Market Takes a Toll on U.S. Pension Plans ).